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Strategic Evaluation Document for Valentinos
This essay presents an analysis and discussion of the strategic position of the Valentinos Personal Introductions Agency and the value/feasibility of an information systems update with regards to the competitive advantage of the business within the UK market. The findings of this essay highlight that the companies' computer systems are an important contingent factor in the strength of their organizational culture, their levels of productivity and motivation, and most importantly the maintenance of their strong and valuable reputation. It is thus recommended that Valentinos update their current systems hastily before any inevitable issues occur that would threaten their competitive position and their ability to capitalize upon the positive growth trends of their operative market.
The Valentinos Personal Introductions Agency is a well-established company that has been operating within the UK market since 1976 and with over 8 million single men and women in the UK between the ages of 18 and 64, and often living without the opportunity to meet potential partners, the company has been very successful. However the management of the organization have expressed a growing concern that is being felt regarding the 10 year old computer systems that are currently being relied upon and the negative affect that such outdated systems are having on the companies' competitive advantage and market share within the UK. This essay will therefore seek to assess the value and importance of the computer system with regards to the competitive advantage of the company, the company culture, and the overall productivity of the organization. The essay will approach this question by firstly evaluating the strategic position of the company both internally, through the use of a SWOT analysis, and externally relative to its competitors and various other contingent factors to competitive advantage through the consideration of Porter's 5 forces analysis model (Porter, 2008). The essay will then proceed to directly discuss the effects that the computer system has upon the Valuentinos organization culture and productivity levels before finally assessing if and how the computer system has provided the company with a competitive advantage such that some clear recommendations can be put forward to the company's managing director regarding their future strategic outlook and potential options.
2.0 Strategic Evaluation
This part of the essay considers the strategic position of the Valentinos company by taking both an internal and external view and duly addressing the relative positions of the companies industry rivals, the consumers, the suppliers, and the general state of the industry and market in terms of threats and opportunities. Firstly, the essay will present a SWOT analysis of the Valentinos company before proceeding to analysis the external trends and factors affecting the company in order to gain a more holistic view of the general strategic position.
2.1 Valentino's current position (SWOT analysis)
The SWOT analysis below highlights a number of salient factors that must be considered in evaluating the companies' strategic position with regards to any possible threats or opportunities that may arise and its ability to take advantage or overcome these factors.
The Valentinos company and brand has been long established, and has exhibited consistent reputable integrity in its operations which is a highly salient factor in the decision making processes of potential consumers
There long established presence in the market also means that they have strong links with various suppliers such as with advertisements on public transport or in newspapers
The company also inhabit the market position of the price leader which makes them well positioned to take advantage of the growing number of price savvy and/or price conscious UK consumers (Telegraph, 2010) and trends within the UK population whereby more people are spending more time at home and are unable to find the time to go out and socialize (Euromonity, 2010a)
Valentinos unique combination of high technology and personal touch through the direct contact phone support services, has been critical in making the Valentinos Personal Introductions Agency a global industry leader
Valentinos also holds the largest database of members which means that any potential client would have the greatest likelihood of meeting somebody when
choosing Valentinos over other industry rivals
The company database used an old version of oracle and an old matching program that is poorly documented and is poorly understood by the companies' current IT staff that are struggling to maintain it.
If this is left to continue then this will most likely lead to performance problems in the near future, which will no doubt be observable to the client base and result in a decrease in market share.
Perhaps the biggest concern would be the accidental loss or release of private information and the subsequent sullying of the companies valuable reputation
The growing UK population proportions of university graduates indicates that a growing number of people in the UK will find themselves in busy careers, as is similarly described of the companies' common clientele demographics (BBC News, 2007, Euromonitor, 2010b).
The number of people using the internet, particularly within the age demographics commonly served by the Valentinos agency, nearly doubled over the period 2000- 2007. (Euromonitor, 2010c)
New avenues for advertisements and promotions such as internet sites that receive a high amount of traffic or mutually beneficial links with other web-based businesses such as online clothes retailers.
The companies position as a price leader is a highly vulnerable one as existing competitors/ industry rivals or perhaps substitutes may choose to challenge this price dominance which can either result in a price war or the competitive obsolescence of the Valentinos Personal Introductions Agency
The companies' position as a leader in terms of technology may also be placed under threat by any highly resourced rivals or new industry entrants, and such an instance could result in a devastating loss in market share
The companies' highly valuable and hard earned reputation for safety, ethics, privacy and integrity could be threatened by poor control over their computer systems and data bases.
As the table (above) illustrates, there are a number of salient opportunities and threats facing the Valentinos company and there is also a number of highly impingent strengths and weaknesses held by the company that play an important role in determining its ability to manoeuvre and navigate through the various external trends and factors that are presented in the Porter's 5 forces analysis. Firstly, with regards to Valentino's industry presence, it can be noted that the company and brand has been very long established within the market and that over the years Valentinos has proven its high standards of ethics, integrity, and accountability in terms of the safety of its clientele and the controlled protection of their personal information. This is a highly advantageous and beneficial factor for the company as it appeals to the client's and potential clients most highly regarded concerns (safety, privacy and control). However, the threat of sullying this reputation through some kind of error in the computer systems could be hugely damaging for the company in terms of competitive advantage.
The companies' long-established position within the industry has also allowed it to attain strong links with networks of clients and suppliers of advertising spaces such as on public transport and in Newspapers. With regards to the companies' network of clients, it can be noted that it has the largest database of people out of all industry rivals and therefore offers clients the greatest likelihood of achieving a positive result. Moreover, although the companies competitive position as an market price leader is a highly vulnerable one, generally speaking, it is also highly competitive in terms of its service which has been exhibited as being highly personal while also being very comprehensive, flexible, and efficient.
With regards to the future outlook of the company, from an internal perspective, Valentinos is well poised to take advantage of the growing young professional demographics and the growing number of Internet users. However, its position as a market leader could be threatened either by the event of a lapse in their computer systems that would compromise their integrity and reputation, or by a new market entrant or highly resourced rival that supersedes Valentinos in terms of technological resources. Nevertheless, new avenues for promotion and advertisement on the internet (e.g. online retail sites and other such high traffic addresses) could be utilized by the Valentinos company in order to further expand upon their market dominance or simply seek more effective and price efficient means of promotion.
2.2 Porters five forces model (An external view of Valentinos' competitive position)
Existing Rivalry Between Firms
The Personal Introduction industry is one that is highly populated with market competitors of different sizes some operating country wide while others differentiate and focus on specific geographical areas or demographic groups such as over 40's. Rivalry within this industry however, appears to rest upon the visible integrity of industry rivals which can be attained through membership to official standards associations and through the strength of promotional campaigns:
Barriers to Entry & The Threat of New Entrants
Due to a growing number of illegitimate companies and a growing concern regarding privacy and integrity (Select, 2010), an official third party association (the Association of British Introduction Agencies) has been created at the instigation of the office of fair trading to the industry as a regulator such that legitimate organizations can gain membership and subsequently accreditation and evidence of its integrity and high standards, as they must follow a set code of practice in order to be accepted for membership (ABIA, 2010). This is therefore a point of rivalry within the industry. This is also in existence to offset the threat of the media and social representation of the industry in general, with common perceptions that it is wholly illegitimate and unethical or that it does not help people (Marsden, 2010). Nevertheless, such associations create a barrier for entry to new industry entrants and this is making the market less dense and more clustered, with companies such as Valentinos occupying increasingly secure and defensible positions within the market and exerting greater dominance with their public familiarity and visibility through the strength of their promotional campaigns. The industry is performing well and experiencing steady market growth, thus, the market will grow more attractive to new entrants and as such the threat increases (IBISWorld, 2010).
The Threat of Substitutes
Specialised Personal Introduction Agencies such as Valentinos are under threat from a number of substitutes as the market continues to grow and become increasingly attractive as a financial investment. Firstly, Newspapers and other business with the means of reaching large quantities of people are beginning to seek entry into the online dating market, most notably the Guardian has diversified so as to include an online dating section 'Soulmates' within its website so as to offer a more select data base of clients (Guardian, 2010). Social networking sites could also be considered as a more indirect threat as they are becoming massively popular and also have all of the prerequisite resources and capabilities for online dating operations and have already began to introduce applications through which online dating is possible (Lee, 2009).
Power of Buyers
Although there is a growing interest in online dating and personal introduction forums and the market is showing encouraging growth, there is a large number of industry rivals competing fiercely for market share currently and as such the power of buyers is very strong. Nevertheless, this is offset somewhat by the great amount of differentiation of industry rivals.
Power of Suppliers
The power of suppliers is also very great due, again, to the quantity of competitors present within the industry and more so due to the generally applicable nature of the supplier businesses such as web-designers and companies renting advertising space and promotional opportunities who are open to bids from businesses in practically any industry.
3.0 The Impact of the new IT/IS System
This section of the essay assesses and discusses the effects of Valentinos' computer systems on the organizational culture and its general levels of productivity before finally addressing the question of whether the computer system has provided Valentino with a competitive advantage.
3.1 How has the system impacted the organizational culture/productivity?
It has been noted in the case study that due to the IT staff's inability to properly manage the (10 year old) matching program has resulted in substantial delays within the clients processes such as the amount of time taken to update a member's details on the website which can be several days which may lead to low levels of consumer satisfaction and perhaps even an exodus to a rival company in the near or distant future. In essence, this significantly reduces the productivity of the organization as substantial amounts of time, effort, and manpower is being wasted on the challenge and confusion of understanding the greatly dated (C++ designed) matching system.
With regards to the organizational culture, it can be observed that the lax and untidy processes that result from the dated computer systems directly contradict the cultural identity of the company, which could be most accurately described as premium standard, trustworthy, safe, and efficient. A confusion regarding the organizational culture and the various messages, meanings and symbols throughout the organization can lead to lulls in motivation and thus productivity, with organizational members not having a familiar and well understood framework within which to operate comfortably and regularly (Huczynski & Buchanan, 2007). This can be a serious problem or an area of potential unrealized as a strong organizational culture has been recognized as a reason for improved levels of company performance (Thompson & McHugh, 2002).
3.2 Has the computerized system provided the firm with a competitive advantage?
The computerized system controlled by Valentinos, as highlighted in the case study, provides the company with the capability to provide their client members with high levels of flexibility and control over their own par-takings within the various incumbent processes with regards to the number of introduction requests that they wish to make, the degree of information confidentiality, their personalized details describing themselves and what they are seeking. The computer systems also allow the company to properly manage their exceedingly large membership base and the associated database of complex information. Thus, in it's function for sustaining, properly maintaining, and utilizing a large database of clients the client is deriving a competitive advantage as a large database of clients, when utilized effectively, can provide any incumbent or potential client members with the greatest possible chance of experiencing a successful match.
The computer system also allows them to maintain control over the vast body of personal and confidential information such as the that gained from the comprehensive questionnaire, which is important from an ethical standpoint and as such is contingent to the up keeping of their reputation as a highly legitimate service with strong business integrity and strong methods of accountability with regards to recordings of what information has been released to whom.
With regards to the organizational culture and how this can bring competitive advantage, it can certainly be supposed that the Valentinos company can strengthen and consolidate their organizational culture that promotes high standards and integrity above all other features. However, many scholars studying the subject of organization culture that claim that strong cultures are linked to improved performance also highlight various caveats (Ogbonna & Harris, 2002) such as that the link between strong culture and competitive advantage is dependent upon whether the culture is better than the cultures of competitors and that it cannot be imitated (Barney, 1991). This may not be the case with Valentinos, however, as noted above, the strength of the company's computer system along with its large database of clients and excellent reputation does provide a strong competitive advantage that cannot be replicated with any degree of ease.
In conclusion, the slight shortcomings in terms of the companies' computer systems and their staff's inability to properly understand and operate them, can potentially have rather significant detrimental effects to the companies culture, productivity, the motivation levels of its staff, and also its reputation among consumer for integrity and high standards of practice. The damaging of the company's reputation should be avoided by any necessary means and therefore it would be recommendable for the company to update its computer systems such that its looming threats are overcome and such that it can fully capitalize on its strong position within a growing and lucrative market.
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